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May 14, 2006

The Top Ten Lies of Corporate Partners

Istock 000000071973Small[1] In a manner of speaking, I’m running out of lies to tell. So far I’ve taken care of entrepreneurs, venture capitalists, engineers, and marketers. The target of this posting is “corporate partners.” (You might find a previous posting, “The Art of Partnering” interesting.)

These are the large, infinitely rich, and high brand-recognition companies that supposedly provide a partner with instant credibility, fundability, and viability. Unfortunately, dealing with a large company is like being “stuck in the belly of a snake”—as my buddy Heidi Mason describes corporate partnerships. She is the co-author of The Venture Imperative.

Before those jaws close around you, and you are eaten alive, listen for these lies.

  1. “We want to do this for strategic reasons.” This is corporate-ese for, “I have no idea why we’re doing this. My CEO met your CEO at a boondoggle conference and told me to talk to you guys.”

    Ideally, what you’d hear instead is, “We think we’ll make a lot more money by partnering with you.” In other words, the large company wants to do this for tactical, not strategic, reasons. This would mean that the partnership has a chance of being “built to last.”

  2. “Our management really wants to do this.” There are two ways you can take this. First, you have a great product, the large company “gets it,” and life could be great. Second, the large company is clueless and desperate. As a rule of thumb, if you’re not 110% sure it’s the former, then it’s the latter. Then you should be thinking, “Do we really want to get in bed with them?”

  3. “We can move really fast.” This means that so far very few people in the organization have been exposed to the idea. As more people get involved and the turf wars begin, progress will slow down, if not reverse. It could also be that this isn’t a lie because “really fast” means nine to twelve months from the large company’s perspective.

  4. “Our legal department won’t be a problem.” In other words, the legal department hasn’t seen the proposal yet. There are two kinds of legal departments in large companies: (a) the kind that automatically says, “No,” when asked, “Can we do this?” (b) and the kind that automatically says, “No,” when asked, “Can we do this?”

  5. (a)“The engineering team really likes it.” (b)“The marketing team really likes it.” Respectively, these lies mean that (a) the marketing team hasn’t seen it yet; (b) the engineering team hasn’t seen it yet. Look at the bright side: once you get past marketing, engineering, and legal, only accounting is left.

  6. “We want to time the announcement of our partnership with the release of a new version of our product.” This is a lie of good intentions. Unfortunately, it means that the gating item of your partnership is a large company’s ability to deliver a new product. May God be with you.

  7. “Our primary concern is whether you guys can scale.” This isn’t a lie. They are really concerned about this--as they should be. After all, your team has never shipped a product before, and you only have six months of cash in the bank. You have may no choice but to lie too. :-)

  8. “We’d like your servers to host most of the code and functionality.” This isn’t a lie, per se. It’s more a frightening admission that the large company’s product is held together by baling wire, duct tape, and chewing gum, so making any changes could make it blow up. Welcome to corporate partnering: one of the things that you’ll learn is that the emperor has no code.

  9. “We’re forming a cross-functional team to ensure the success of this project.” This ensures that no one is responsible for the success of the partnership, nor is there anyone who’s going to take the blame. Instead, you want the large company to identify one “champion” for the partnership. One champion is always better than one cross-functional team.

  10. “I’m leaving soon, but I’ve found a great person to take over my role in this project.” Uh oh, now your champion is splitting, and  the person who was arguing against the partnership is going to be in charge of implementing it. You’ve got some major evangelism and bridge repairing to do. May the farce be with you.

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Comments

Hi
When I read that post, the top ten lies I understood one thing, there are no frontier, it´s the same everywhere...
Nice blog
Le perfologue

Dear Guy,

In your spirit, I did one about the lies spewed by scientists and technopreneurs.

http://sgentrepreneurs.com/2006/05/21/top-8-lies-by-technopreneurs-scientists/

Hope that you will enjoy it.

Best regards,
BL

WOW! Based on my 25 years working with the Fortune 500...you NAILED IT! Where do I sign up to get you by email! : ) Thanks for keeping it real.

It seems like there isn’t much that a corporate partner can say that would be the truth.
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Wow, nice topten!

Hoho, great list! :) I must admit I've faced some of these words in my current work too.

Hopefully they have not been lies on those cases.. You never know.. ;)

Related to the 'We'll drive $1M to you in Sales' is the comment I've heard from big company to remain nameless 'We have sales people all over the world who'll be carrying your product 'in their bag'. We can get you entree into any account, we're in all of them.'

Reality: sales forces of companies this large are indeed large, however their sales people are selling maintenance contracts on legacy products and are some of the slowest order takers around...what the big company will do is put you on an endless series of con calls in order to vet you to get a meeting with a low level functionary at a prospect that you could have closed by the time the partner actually delivered.

Hi Guy,

Number 8 on the Corporate Partners list made me laugh out loud.

Fantastic blog!

Nettie

Geez, you're a cynical chappie, no?

How about a 'Top Ten Lies of CEO's'? :)

Please, you haven't completed your Lies Opus until you have told the Top Ten Lies of Human Resource Executives.

How 'bout the top ten lies of law firms?

Hi Guy,

Having both run the strategic alliances group for a major corp. and been on the other side of the table many times with startups - you certainly speak the truth.

The thing that always amazes me is how many smaller companies/startups ignore very obvious warning signs (and lies) and go ahead with partnerships with big corporations that are ill-fated from the start (or hold on to the hope of closing a partnership when there really is none).

Why do they do this? Sometimes they become so invested in the idea of partnering and the dream of the perceived value it would bring (in valuation, revenue, credibility) that they loose all ability for rational examination of the situation.

Investors usually are not much help here. They often too get caught up in the "promise" and are willing to overlook flaws in the deal just like management.

At least if you learn to recognize the lies you have a chance to manage through or around them. Its companies that choose to ignore them that really get hurt.

If you get a feeling deep down in your gut that says "this doesn't seem right", you should listen to it. Some partnerships work out really well - though a Harvard Business Review article estimated that 60% of strategic alliances fail (Caroline Ellis, 1996).

A great source for background on alliances is www.alliancestrategy.com. It is more academic than your practical teachings but worthwhile checking out.

Thanks for a great blog!

Myron

How about advertising agencies or public relations agencies?

I'm sure you've got a list for those folks as well...

I've heard #7 the most. Of course, being a 15-person firm doesn't help. I've also learnt that #7 is usually the excuse a prospective or existing partner is most likely to use to get out of your existing partnership. Time for self-plug. Check out my post on Partnerships at http://everydayentrepreneurs.blogspot.com/2006/04/partnerships.html

This is a good, funny entry! So businessmen must be good in doublespeak eh, or reading between the lines. I thought businessmen are candid people and tell things as they really are. LOL. I know we resort to euphemisms sometimes to maintain a (business) relationship.

And if your corporate partner is a channel partner that you hope will sell lots of your product, another common lie is "oh, we'll easily do a $1M per year in sales."

It would be nice to see the Top Ten Lies of a Chief Technology Evangelist.

Also, it would be nice to see some thoughts from you on what you think about being a CTE, and what makes it such a unusual line of work.

I also like:

"The deal is pretty much approved - we're just waiting for our Chairman. He's been on the road a lot lately."

I've found this means:

"Your deal isn't a high enough priority for us to look at right now but we don't want to tell you that in case you do the deal with our #1 competitor."

Feedback: I'm really enjoying the last week or so - the topics feel more relevant and useful.

I definitely like your product review posts - your readers are (ahem) smart and well connected. I'd like to know more about them somehow. profiles? not sure how exactly.

You've asked for topic suggestions a couple times. I think one of your core competencies that hasn't been revealed in the blog much is your personal network. No, I don't want your rolodex published! I'd be interested in the consensus opinions on tech topics of today, from you AND people you know. Specific topic ideas:

1. Web 2.0 startups' lack of clear financial models. How is this not dotcom again?

2. Aging Microsoft - are they the same terror they once were? I haven't heard as many horror stories of late.

3. Mobile OS wars update. Are you betting on Symbian or Microsoft, or someone else? Is Palm dead yet?

3.5. Why isn't Apple in the mobile UI fight? They seem poised for success here. The Ipod success has proven Apple to be mobile UI champs, and Apple has cool that Microsoft dreams of. Apple is tech savvy enough to build/buy a well designed smartphone OS, unlike Nokia.

I've never worked out $1b deals...but I sure liked this post...and I agree with the comment about the legal department's job.

One of my favorites is along the line of “Our management really wants to do this.”

"The Board won't allow me to spend that money." right...just say "No" and make it final!

-Brandon Hopkins

Once again, a concise roadmap to ending up at the Project Failures blog. Come hither, we are waiting for you.

Michael Krigsman
http://projectfailures.com

More subjects?

I went ahead and came up with the top 12 marketing guru sins.
:-)

A little something for everyone.

Keep up the good work!

How about top ten lies of Mr. Kawasaki to Mrs. Kawasaki to spend more time on his blog?

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